More needs to be done to stop energy bill threat to firms - mayor

West Midlands mayor Andy Street showed the boss of Ofgem first-hand how businesses locked into sky high energy contracts are being forced to lay off staff as they battle for survival.

The mayor took Jonathan Brearley, chief executive of the energy watchdog, to Robinson Brothers Limited, a global supplier for specialty chemicals, based in West Bromwich.

The manufacturer employed 260 local people but made 40 staff redundant last year to stay afloat after its energy bill rocketed from £1.9 million to £3.9 million.

Adrian Hanrahan, managing director of Robinson Brothers Limited, said the process of letting staff go was “very painful”.

“We've had to take people out, we've had to take products out that we thought would not stand this significant increase in energy prices," he said. "It's a family business - the same family since 1869 - and we all pretty much know each other.

“I feel government should be talking about this [�] to me it feels like profiteering. It feels like we are an easy hit because there's nothing we can do about it.

Mr Hanrahan said his company bought its gas and electric two to three years in advance, but said he was now forced to contend with “high prices”.

“The industrial cap was set too high for us," he added. "We don't get enough support. So how do we grow? I keep repeating this, we're not here just to survive. We really want to survive having grown the business and therefore we need help, and we certainly don't want any free handouts from the government.

“I'd ask the Prime Minister do you really want manufacturing in this country? Because if you do, you've got to sort this out."

The visit took place as the mayor again called on energy providers to release businesses from punitive fixed-price energy contracts signed last year - when energy prices were at a peak - and renegotiate deals. He said failure to do so could result in further “existential pressures” for businesses.

Thousands of companies, including those in the West Midlands, have warned of their financial struggles after signing fixed-price contracts in the second half of 2022.

Last autumn, data from Greater Birmingham Chambers of Commerce suggested 34 per cent of local businesses remain locked into fixed-term energy contracts of 50p/kWh or higher.

Other research suggests more than one in 10 companies in the West Midlands are now spending in excess of 20 per cent of their turnover on energy.

The mayor said it was critical for Ofgem to understand how these “punitive contracts affect businesses, customers and jobs” during the current cost-of-living crisis.

While customers are expected to see lower gas and electricity bills this winter due to a predicted fall in the energy price cap from October, many businesses have so far failed to benefit from the downward trend in wholesale prices.

Ofgem, the energy regulator for Great Britain, is able to set the energy price cap for domestic consumers but does not have regulatory powers over prices for businesses.

Mr Brearley said many businesses had “faced the same issues as households”.

He added: “Ofgem works for all customers, and this includes businesses, who we know have faced the same issues as households. Following a review earlier this year we've made some changes to improve things for businesses and are consulting on some other ways to extend protections.

“However, to improve things will require sustained efforts from across government, the industry and the regulator. I'm grateful to the Mayor and Robinson Brothers for meeting with me to tell me about their experiences and concerns.”

In March, the mayor set up a roundtable with Matthew Rhodes, chair of the West Midlands Industrial Energy Taskforce, and the Black Country LEP, to discuss emergency short term actions to help businesses with energy costs.

Its report, published in July, estimated the impact of the energy crisis on the region's businesses had reduced output - or GVA (Gross Value Added) by 2 per cent. It added that around 14 per cent were facing energy costs exceeding 20 per cent of their turnover and 30 per cent remain locked into fixed tariffs that were more than three times pre-crisis rates.

Pictured: From left to right - Andy Street, Jonathan Brearley and Adrian Hanrahan, managing director of Robinson Brothers Limited